Homes: So many residents are adding to or tearing down older houses that the city is considering action. But officials aren't sure how far they should go.

Bettye Hayes stood on the curb outside her home in southwest San Clemente, her hands clasped in front of her to contain the excitement.

"This is my dream!" she said, watching as workers added a second story to her 1940s bungalow. When the work's done, the 69-year-old retired teacher will have twice as much floor space, not to mention an unobscured view of the glistening Pacific that she's waited 20 years for.

The scene isn't everyone's dream.

Wherever you look on the winding, hilly streets of the coastal community's historic district, where the city's developer Ole Hanson envisioned a "Spanish village" in the 1920s, someone is tearing down a cottage to build a home two or three times its size--or, like Hayes, erecting a sizable addition.

In response, the city is considering an ordinance that would more strictly regulate development, and perhaps even prohibit the "tear downs" that have become common.

"If you look at any coastal community, as property values increase it's natural [that] people try to maximize use of their land," City Manager Mike Parness said. But, "sooner or later it starts to change the character of those neighborhoods. You find single-story Ole Hanson-type cottages next door to very large single-family homes. The question is to what extent that should be allowed."

At stake, some say, is the small-town charm that attracted families, retirees and Marines from Camp Pendleton to San Clemente in the first place.

Other cities, including Beverly Hills and Malibu, have enacted ordinances to restrict or curtail "mansionization" of neighborhoods. But San Clemente's isolated perch at the south end of Orange County has made it an especially prime area for construction of bigger homes.

"We are the poor man's alternative to Laguna Beach," Realtor Bob Hunt said. "What you might pay $700,000 for in Laguna, perhaps you could get in San Clemente for $500,000 or $550,000."

San Clemente is still marked by modest homes just blocks from the beach--a major contrast to more tony towns like Laguna Beach, Newport Beach and even Huntington Beach.

Many of the palm-lined blocks sandwiched between the coast and Interstate 5 are Spanish Colonial Revivals from the 1920s and 1930s--usually with two or three bedrooms, and fruit trees in small backyards. Streets follow the contours of the coastal hills, creating more ocean views.

On La Rambla, Hayes' expanded home is rising on a street that includes some small Spanish stucco bungalows as well as larger modern beach homes with decks overlooking the Pacific.

After years of talk, city officials said they are still not sure what an ordinance would restrict. But they said it's time for the city to address the issue.

"It's a classic battle between private-property rights and the ability to do what you wish, versus trying to maintain character of certain communities," Parness said. The question is, "What does the larger structure do to the overall character of the neighborhood?"

Said Jim Holloway, the city's community development director: "In Newport Beach, they're tearing down the 3,000-square-foot homes and putting up 10,000- to 12,000-square-foot ones. It's looking toward the future, and how do we want to look."

San Clemente residents have mixed feelings about building restrictions.

Some longtime residents have watched property values skyrocket in the past dozen years and are taking their home equity and building the additions they've dreamed of and can now afford.

"Most people I speak to are resigned to that fact that this is what's happening now and are dealing with it," said Linda Verraster, who lives on Avenida Cordoba.

Sue and Michael Beschen built their 3,000-square-foot home 20 years ago and have seen many more big houses go up since then. They believe the building boom has made the neighborhood more attractive.

"I don't think people mind people coming in and fixing up their houses," Sue Beschen said.